Cautious Go-Ahead on track

The firm - which runs the Southeastern and Southern rail franchises in a joint venture with French company Keolis - said the outlook for the business was "difficult to predict" as the Government's spending review looms in October.

Alongside a still weak economy, Go-Ahead fears possible deficit-busting measures could include reduced Government support for the bus industry, which is also facing a Competition Commission probe.

The firm - which saw more than a billion passenger journeys across its business for the first time in the year to July 3 - saw overall pre-tax profits fall 24 per cent to 88.7m.

The slide was driven by lower rail subsidies from the Department for Transport - offsetting higher revenues on its new high-speed services - but the drop was smaller than expected by the City due to lower electricity costs from operator Network Rail.

Go-Ahead's chairman Sir Patrick Brown said the group was "pleased with progress" despite challenging conditions.

At Southeastern, revenues were up 7.5 per cent over the year thanks to the boost from the premium fares from the introduction of the UK's first high-speed rail service last December.

The franchise has also been entitled to revenue support since April as recession-hit turnover has not matched up to assumptions made when Go-Ahead bid for the deal in 2005.

Total revenues across the rail arm, which also includes the London Midland franchise, were down 0.9 per cent to 1.54bn while operating profits slid from 61.5m to 37.3m.

The group's bus business posted better than expected profits and expects prospects to remain "robust" over the coming year despite lower margins in London. Cheaper fuel costs should also help the firm make savings of 7m a year.